Zillow Talk – Introduction

Buying a house is a milestone in almost everyone’s life. Many work for several years, if not decades, to afford a house and then to pay off the mortgage. For many, it is their largest investment and asset. Surprisingly, not many people do due diligence in understanding the markets, weighing their different options, and separating fact from myth based on (now) widely available data.

The CEO and the chief economist of Zillow have co-authored a book, ‘Zillow Talk, The New Rules of Real Estate’ to help people make smart decision about buying or selling their houses, by:

a) studying the widely available data, b) separating myth from fact, and c) understanding how rules of real estate changed with the advent of technology.

I am also highly impressed by Spencer Rascoff’s vision and courage on the very early adoption and application of big data to first disrupt travel industry (he co-founded Hotwire) and then real estate industry in the United States.

In these series of articles, I will summarize each of the 26 chapters of this book into one article of up to 400 words, after providing a summary of the introduction in this first article.

Introduction: 

Unlike other investments, purchasing a house is not solely based on financial and economical considerations. Many other elements, including emotional ties, culture and the comfort of the family play major role on how we decide.

In the introduction, Spencer Rascoff recounts his own experience in purchasing their family houses, and how in the process he realized that the real estate industry needed to be disrupted by collecting, analyzing and making the real-time data available to the public. Before Zillow, sellers and buyers needed to wait for days to have an estimate on the value of the house and data about the neighborhood. Today, Zillow makes that information and much more available instantaneously. Through the analysis of the vast amount of real-time and up-to-date data, many myths and conventional wisdom about the housing market are busted and many are proved to be true.

He then emphasizes that the three things that matter in property are NOT ‘location, location, location’, but ‘future location, future location, future location’.

A very interesting piece of data is about the change in square footage of residential properties per person from less than 300 square feet in 1950 to almost 900 in 2000. Within the same period, the square footage of commercial properties per employee decreased from 600 to 100. This is all because of the change in people’s lifestyle, with fewer members in the family, and demand for home-office, media room or even fitness rooms. In commercial market however, the internet and high tech made libraries, archives and big computer rooms irrelevant, and made telecommuting possible.

Real estate is a very major element of macro-economy and even a political issue. Therefore access to transparent timely information is essential for the health of the market and consumers’ confidence.

It should also be noted that with more information about the market and house values, the threat of speculative pricing and bubble in the housing market would be less. For my Canadian friends who are handcuffed by the monopolistic power of TREB: Unlike MLS, Zillow provides all information, including the estimated price of EVERY HOUSE with high accuracy, and the price at which houses were sold, and not just the listing price.

PS: see the book on Amazon at https://www.amazon.com/Zillow-Talk-Rules-Real-Estate/dp/1455574740